Mortgage Bond Co. of New York v. Carter

• Court: Alabama Supreme Court
• Writing for the Court: GARDNER, Justice.
• Citation: Mortgage Bond Co. of New York v. Carter, 161 So. 448, 230 Ala. 387 (Ala. 1935)
• Decision Date: 16 May 1935
• Docket Number: 6 Div. 611
• Parties: MORTGAGE BOND CO. OF NEW YORK v. CARTER.

161 So. 448

230 Ala. 387

MORTGAGE BOND CO. OF NEW YORK v. CARTER.

6 Div. 611

Supreme Court of Alabama

May 16, 1935

Appeal from Circuit Court, Jefferson County; J.F. Thompson, Judge.

Suit in equity to rescind a contract by Ruth Carter against the Mortgage Bond Company of New York. From a decree overruling a demurrer to the bill, respondent appeals.

Affirmed.

Howze &amp Brown, of Birmingham, for appellant.

Basil A. Wood, of Birmingham, for appellee.

GARDNER Justice.

The bill is filed for rescission of a contract of purchase of a designated dwelling for fraudulent representations as to its condition, a cancellation of the notes and mortgage given to secure the remainder of the purchase money, and for an accounting, and recovery of the sum paid. Bullard Shoals Mining Co. v. Spencer, 208 Ala. 663, 95 So. 1.

The attack upon the sufficiency of the bill is here rested upon the theory that it discloses upon its face complainant too long delayed a rescission of the purchase after discovery of the fraud and a waiver on her part of the right to rescind.

Defendant relies upon our decisions to the effect that one electing to rescind a contract for fraud must exercise that right within a reasonable time, that is, with due promptitude from the time the fraud was discovered or ought to have been discovered from facts brought to his attention. Bynum v Southern Building & Loan Association, 223 Ala. 392, 137 So. 21; Day v. Broyles, 222 Ala. 508, 133 So. 269; Stephenson v. Allison, 123 Ala. 439, 26 So. 290; Fairbanks, Morse & Co. v. Dees, 220 Ala. 41, 126 So 624; Capital Security Co. v. Holland, 6 Ala.App. 197, 60 So. 495.

But as observed by this court in Stafford v. Colonial Mortgage &amp Bond Co., 221 Ala. 636, 130 So. 383, 386: "In applying the doctrine of waiver of the right of rescission by the victim of fraud, the essential principles of justice and equity in the particular case should be kept ever in mind." And in the same case the court further said: "Still, since fraud may consist in misrepresentations innocently made, there can surely be no prejudice to the right of rescission, if the defrauded party does notify the other of the facts, and invite him to make good his representations, if the case is such that he may be able so to do. Such seems to be the suggestion of a spirit of fair dealing and mutual understanding to be commended in business relations; a course tending to avoid needless controversy and litigation." And in Gorman-Gammill Seed & Dairy Supply Co. v. Carlisle, 220 Ala. 116, 124 So. 288, 290, recognizing this same principle, is the following language here pertinent: "It has been more than once stated in opinions of this court, and now reaffirmed, that delay in exercising the right to rescind due to promises and efforts of the seller to demonstrate that the plant was suitable for the purpose...